Conformed Copy - C2267 - Railways Restructuring Project - Amendment

Page 1 April 29, 1996 The Honourable Simon Mbilinyi Minister of Finance Ministry of Finance P.O. Box 9111 Dar es Salaam, Tanzania The Managing Director Tanzania Railways Corporation P.O. Box 468 Dar es Salaam, Tanzania Dear Sirs: Re: Credit No. 2267-TA (Railways Restructuring Project) Amendment to Development Credit and Project Agreements We refer to the Development Credit Agreement, dated September 3, 1991, between United Republic of Tanzania (the Borrower) and Inter- national Development Association (the Association), and the Project Agreement of the same date, between the Association and the Tanzania Railways Corporation (TRC) (the Agreements)as amended to date. We also refer to the letter from your Ministry, dated December 4, 1995, requesting changes to onlending rates and procurement procedures for the Project and to the discussions held during the recent supervision mission of the Association. This letter is to inform you of our agreement to your request and to propose the following amendments to the Development Credit and Project Agreements: Development Credit Agreement 1. Section 1.02 is amended by the deletion of "and" at the end of Section 1.02 (i), the insertion of "and" after Section 1.02 (j) and the insertion of the following as Section 1.02 (k): "(k) "Performance Contract" means the performance contract to be signed between the Borrower and TRC as the same may be amended from time to time and such term includes any schedules to the performance contract". 2. Section 3.01 (b) is amended to read as follows: "The Borrower shall relend the proceeds of the Credit to TRC under a subsidiary loan agreement to be entered into between the Borrower and TRC, under terms and conditions which shall have been approved by the Association and which shall include, inter alia, interest at a rate per annum equal to the rate announced semi-annually by the International Bank for Reconstruction and Development for its loans plus 10% of that rate per annum, with the principal to be repaid in twenty years, including five years of grace and with TRC bearing the cost of fluctuations in the currencies relent to it." 3. Section 5.01 (e) is amended by the deletion of "or" and the insertion of a comma after the words "Ministerial Directive" in the first line, and the insertion after "MOU" of the words "and Performance Contract". 4. The table in paragraph 1 of Schedule 1 is amended to read as in the attachment to this letter. Project Agreement 5. Section 2.01 (a) is amended by the deletion of "and" and insertion of a comma after the words "Ministerial Directive" and the addition of "and Performance Contract" after "MOU". 6. The last sentence of Section 4.02 (a) is amended to read: Page 2 "For each Fiscal Year, TRC shall earn a return of not less than 1% from 1995 to 1998, 2% in 1999 and 4% in 2000 on its total capital employed in the previous fiscal year, said total capital being determined taking into account TRC's fixed assets as revalued from time to time in accordance with sound and con- sistently maintained methods of valuation satisfactory to the Association." 7. Schedule 1 is amended by renaming "Part D", "Part E" and inserting a new Part D as follows: "Part D: Other Procurement Procedures 1. National Competitive Bidding Goods estimated to cost less than the equivalent of $250,000 per contract, up to an aggregate amount not to exceed $2,500,000, may be procured under contracts awarded on the basis of competitive bidding advertised locally, in accordance with procedures satisfactory to the Association. 2. International Shopping Goods estimated to cost less than the equivalent of $100,000 per contract, up to an aggregate amount not to exceed $500,000, may be procured under contracts awarded on the basis of international shopping procedures in accordance with the provisions of paragraphs 3.5 and 3.6 of the Guidelines. 3. Direct Contracting Proprietary equipment, up to an aggregate amount not to exceed $500,000 may be procured directly from the manufacturers of such equipment. 4. Force Account Works which meet the requirements of paragraph 3.8 of the Guide- lines, and costing $15,000,000 equivalent in the aggregate, may, with the Association's prior agreement, be carried out by force account in accordance with the provisions of said paragraph of the Guidelines." All provisions of the Agreements, except as amended herein, shall remain in full force and effect. Please confirm your agreement to the amendments by countersigning, dating and returning to us the enclosed copy of this letter. This amendment shall become effective as of the date of countersignature. Sincerely, James W. Adams Director Eastern Africa Department CONFIRMED: UNITED REPUBLIC OF TANZANIA By: Peter Ngumbullu Authorized Representative Date: June 4, 1996 Page 3 TANZANIA RAILWAYS CORPORATION By: R.N. Makoi Authorized Representative Date: June 4, 1996 Attachment The table in paragraph 1 of Schedule 1 to the Agreement is amended to read as follows: "Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (1) Civil works 17,000,000 100% of foreign expenditures and 80% of local expenditures (2) Goods and 26,000,000 100% of equipment foreign expenditures and 90% of local expenditures (3) Consultants' 9,300,000 90% services and training (4) Refunding of 233,700 Amounts due Project pursuant to Preparation Section 2.02 (c) Advance of this Agreement (5) Unallocated 3,566,300 __________ TOTAL 56,100,000"